My basic point is that this is a crisis that we have manufactured out of whole cloth. We have created a circumstance in which the world doubts our credibility, rating agencies are thinking of downgrading our debt and the dollar's role as the world's reserve currency could be jeopardized.

Please understand that none of these things are happening because the United States is running deficits. There was no indication -- by any metric -- that the United States was having difficulty borrowing money one month ago. In fact, the world has been lending money to the United States more cheaply than ever before.

We face downgrades and investor panic not because of our deficits but because we are behaving like deadbeats, refusing to pay our bills, pouting while the bill collector waits at the door.

We do have a large deficit and debt and we do need to get it under control. That the Tea Party has raised awareness about this is admirable. And I agree with their view that the current set of entitlements -- Medicare especially -- have to be reformed dramatically to get our fiscal house in order. But that is not an excuse to endanger the good standing of the United States.

First you pay the bills and then you figure out how to change your spending habits.

I’m on record as being skeptical that the Republican party, as a whole, is ever likely to favor even moderate reductions in defense spending, and it's already clear that the party's top hawks are deeply opposed to the way the deal would handle the military budget. Still, given the influence of new House members who may (and only may) not be quite as determined to protect defense pork, I think it’s at least somewhat unclear at this point whether defending the defense budget or attacking new taxes is the more important current priority for the GOP. And there lies the potential upside for folks opposed to spending inside and outside the Pentagon: If Republicans make the choice to refuse new taxes rather than preserve defense spending—and, then, in an even bigger if, stick to it in coming years—well, that would be a real win for libertarians, even if the spending reductions themselves are only moderate in scope.

This is counterintuitive, but the trigger is actually pretty good for Democrats. For all that MoveOn thinks that it would force benefit cuts to Medicare, Medicaid and Social Security, it actually wouldn’t trigger benefit cuts to any entitlements. The only cuts it would force would be a 2% or more haircut for Medicare providers. And House Minority Leader Nancy Pelosi, along with most Democrats, has never opposed provider cuts. Not only that, most progressives actually want the Pentagon cuts. So if the committee deadlocks and the trigger is pulled, Democrats won’t be miserable.

Most tragically, the deal provides no certainty about the ultimate resolution of the capital's fiscal mess. Instead, the House Republicans' success in forcing concessions out of Obama and Senate Democrats only encourages them to follow the same game plan next month, when Congress has to adopt a set of spending bills to keep the government operating past Sept. 30. A dispute between House Republicans and Senate Democrats has already forced the Federal Aviation Administration to suspend construction projects at airports around the country, idling 70,000 workers. Washington may have averted a partial government shutdown this week, only to invite more of them in the months to come.

After the debt crisis ends, the democracy crisis must be tackled. Nobody wins when our constitutional system falters: not the president, who gains unilateral power but loses a governing partner; not Congress, which gets to blame the president but risks irrelevance; and certainly not the American people, who have to bear the resulting dysfunction.

Make no mistake about it, what we’re witnessing here is a catastrophe on multiple levels.

It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Mr. Obama has thrown all that away. And the damage isn’t over: there will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.

In the long run, however, Democrats won’t be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy? And the answer is, maybe it can’t.